<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
ONYX ACCEPTANCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ONYX ACCEPTANCE CORPORATION
8001 IRVINE CENTER DRIVE, 5TH FLOOR
IRVINE, CA 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of Onyx Acceptance Corporation, a
Delaware corporation (the "Company"), will be held at the Corporate Headquarters
of the Company located at 8001 Irvine Center Drive, 5th Floor, Irvine,
California, on May 22, 1997, at 10:00 a.m. for the following purposes:
1. To elect two directors, each to serve a three year term;
2. To ratify the appointment of Coopers & Lybrand, LLP as independent
accountants of the Company for the fiscal year ending December 31, 1997;
and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed April 30, 1997 as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
ENCLOSED.
By Order of the Board of Directors
Regan E. Kelly
Assistant Secretary
Irvine, California
May 2, 1997
<PAGE> 3
ONYX ACCEPTANCE CORPORATION
8001 IRVINE CENTER DRIVE, 5TH FLOOR
IRVINE, CALIFORNIA 92618
------------------------
PROXY STATEMENT
------------------------
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Onyx Acceptance Corporation, a Delaware corporation (the
"Company"), in connection with the Annual Meeting of Stockholders to be held at
10:00 a.m. on May 22, 1997, at the Corporate Headquarters, 8001 Irvine Center
Drive, 5th Floor, Irvine, California, and at any and all postponements and
adjournments thereof.
This Proxy Statement and accompanying proxy will first be mailed to
stockholders on or about May 2, 1997. The costs of solicitation of proxies will
be paid by the Company. In addition to soliciting proxies by mail, the Company's
officers, directors and other regular employees, without additional
compensation, may solicit proxies personally or by other appropriate means. The
Company will reimburse brokers, banks, fiduciaries and other custodians and
nominees holding Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
materials to the beneficial owners of such Common Stock.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of the Company's Common Stock of record as of April 30,
1997, will be entitled to
vote at the Annual Meeting. On April 30, 1997, there were outstanding 5,700,515
shares of Common Stock, which constituted all of the outstanding voting
securities of the Company. Each share of Common Stock is entitled to one vote on
all matters to come before the Annual Meeting.
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast will be required for approval of Proposal 1 (election of directors)
and the affirmative vote of a majority of the votes cast will be required for
the approval of Proposal 2 (ratification of the election of independent
accountants) and to act on all other matters to come before the Annual Meeting.
For purposes of determining the number of votes cast with respect to any voting
proposal, the sum of votes cast and abstentions are included. Abstentions with
respect to any proposal are counted as "shares present" and have the effect of a
vote "against" such proposal as to which they are specified. Broker non-votes
with respect to any proposal are not considered "shares present" and, therefore,
have the effect of reducing the number of affirmative votes required to achieve
a majority of the votes cast for such proposal. Broker non-votes will be counted
for the purpose of determining whether a quorum is present.
REVOCABILITY OF PROXIES
Proxies must be written, signed by the stockholder and returned to the
Assistant Secretary of the Company. Any stockholder who signs and returns a
proxy may revoke it at any time before it is voted by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a date
later than the date of the proxy being revoked. Any stockholder attending the
Annual Meeting in person may withdraw such stockholder's proxy and vote such
stockholder's shares.
<PAGE> 4
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, and their ages and
positions as of December 31, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- ------------------------------------------
<S> <C> <C>
Thomas Stickel(1)(2) 47 Chairman of the Board
John W. Hall 35 President, Chief Executive Officer and
Director
Don P. Duffy 42 Executive Vice President and Chief
Financial Officer
Regan E. Kelly 45 Executive Vice President and General
Counsel
Frank Marraccino 41 Executive Vice President
Bruce R. Hallett(1) 40 Secretary and Director
Robert A. Hoff(2) 44 Director
G. Bradford Jones(2) 41 Director
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
The Company's Amended and Restated Certificate of Incorporation provides
for the Board of Directors to be divided into three classes, with each class to
be as nearly equal in number of directors as possible. At each annual meeting of
the stockholders, the successors to the class of directors whose term expires at
the time are elected to hold office for a term of three years, and until their
respective successors are elected and qualified, so that the term of one class
of directors expires at each such annual meeting. The terms of office expires as
follows: Mr. Hallett and Mr. Duffy, 1997; Mr. Stickel and Mr. Hall, 1998; and
Mr. Hoff and Mr. Jones, 1999.
Officers are elected by, and serve at the discretion of, the Board of
Directors. There are no family relationships among the directors or executive
officers. In January 1994 the Company established a Compensation Committee. In
March 1995, the Company established an Audit Committee.
At the Annual Meeting, two nominees, Bruce R. Hallett and Don P. Duffy are
nominated for election, each Director to serve until 2000 and until his
successor is elected and qualified. Nominee Hallett has been a director since
1993. Nominee Duffy was appointed to fill a vacancy on the Board of Directors in
January 1997 and has been a director since 1997. The following information is
submitted concerning the directors and executive officers of the Company,
including nominees for election, Bruce R. Hallett and Don P. Duffy.
Thomas Stickel has served as a Director of the Company since April 1995 and
as Chairman of the Board since May, 1996. Mr. Stickel is Chairman and Founder of
American Partners Capital Group, a corporation specializing in pension fund
investment, design and development. As Chairman of American Partners Capital
Group, Mr. Stickel is responsible for overseeing the company's core operations
as well as the activities of its board of directors. In 1992, Mr. Stickel
founded American Partners, Inc., a corporation specializing in Latin American
business development, and served as its Chairman until 1994. From 1983 to 1992,
Mr. Stickel served as the Chairman and Chief Executive Officer of TCS
Enterprises, Inc., a financial services holding company. Mr. Stickel served on
the Board of Directors of Catellus Development Corporation from 1993-1996. Mr.
Stickel also serves as a director of San Diego Gas and Electric Company and
several privately held companies.
John W. Hall has served as President, and as a Director of the Company
since August 1993 and as Chief Executive Officer since September, 1996. From
1988 to 1993, Mr. Hall was the M.I.S. Director of Western Financial Savings Bank
("WFS"), developing and implementing operational technology with an emphasis on
the Auto Finance Division. From 1985 to 1988, Mr. Hall was a founder and
president of Micro Advantage, a developer and seller of software products for
the business education industry. From 1983 to 1985, Mr. Hall was Assistant
Director of Data Processing for a Los Angeles school district in Southern
California.
2
<PAGE> 5
Don P. Duffy has served as an Executive Vice President and as the Chief
Financial Officer of the Company since October 1993 and as a Director of the
Company since January, 1997. From 1988 to October 1993, Mr. Duffy was a Senior
Manager for Ernst & Young, specializing in the financial services industry. As a
senior manager at Ernst & Young, Mr. Duffy was responsible for managing
engagements to banks, savings institutions and finance companies with assets
ranging from $100 million to $3 billion. Mr. Duffy was responsible for public
offerings of over $2 billion of automobile collateralized bonds and pass-through
certificates. From 1981 through 1988, Mr. Duffy held other positions with Ernst
& Young and its predecessor.
Regan E. Kelly has served as an Executive Vice President and General
Counsel of the Company since August 1993. From 1985 to August 1993, Mr. Kelly
served as Vice President, Secretary and General Counsel for Westcorp, where he
was responsible for regulatory reporting, internal asset review and all areas
related to the Securities and Exchange Commission and Office of Thrift
Supervision and as Senior Vice President and a member of the Board of Directors
of Western Financial Savings Bank ("WFS"). From 1989 to August 1993, Mr. Kelly
held the position of President of Western Financial Auto Loans 2, Inc., the
finance subsidiary of WFS through which WFS securitized and sold its automobile
receivables.
Frank Marraccino has served as an Executive Vice President of the Company
since January 1996 and was a Senior Vice President from August 1993 to January
1996. From 1992 to 1993 Mr. Marraccino was responsible for overseeing the
production and servicing of a $1 billion portfolio of automobile loan
receivables. From 1987 to 1992, Mr. Marraccino served as Manager of Western
Financial Savings Bank ("WFS") San Diego Dealer Center where he was responsible
for overseeing WFS' San Diego portfolio. From 1981 to 1987, Mr. Marraccino held
the position of Collection Manager with WFS.
Bruce R. Hallett has served as a Director and Secretary of the Company
since November 1993. Since February 1993, Mr. Hallett has been a partner in the
law firm of Brobeck, Phleger & Harrison LLP and Managing Partner at the firm's
Irvine office since 1996. From January 1989 until February 1993, Mr. Hallett was
a partner in the law firm of Morrison & Foerster LLP.
Robert A. Hoff has served as a Director of the Company since November 1993.
Since 1983, Mr. Hoff has been General Partner of Crosspoint Venture Partners, a
private venture capital investment company where he is responsible for making
capital investments into emerging companies and, thereafter, conducting
oversight of such investments through consulting and service on boards of
directors. Mr. Hoff also serves as a director of publicly-held PairGain
Technologies, Inc., a developer and manufacturer of telecommunications equipment
and as a director of several privately-held companies.
G. Bradford Jones has been a Director of the Company since November 1993.
Mr. Jones is currently a General Partner in the venture capital firm of
Brentwood Associates, which he joined in 1981 and where he is responsible for
making capital investments into emerging companies and, thereafter, conducting
oversight of such investments through consulting and service on boards of
directors. Mr. Jones also currently serves as a Director of Interpore
International, a manufacturer of synthetic bone graft materials for orthopedic
use, Plasma & Materials Technologies, Inc., a manufacturer of advanced etching
and deposition equipment for the semiconductor industry, and ISOCOR, a vendor of
electronic information exchange software. Mr. Jones is also a director of
several privately-held companies.
3
<PAGE> 6
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
four additional most highly compensated executive officers (the "Named Executive
Officers") for the years ended December 31, 1996 and December 31, 1995 whose
compensation was in excess of $100,000. Information for fiscal year 1994 is not
included because the Company did not go public until March, 1996. The Chief
Executive Officer and an Executive Officer who have resigned are included in
this table on the basis of salary and bonus earned for 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRESENT YEAR ENDED --------------------- UNDERLYING
PRINCIPAL POSITION DECEMBER SALARY BONUS OPTIONS(1)(4)
- ------------------------------------------------ ---------- -------- -------- ------------
<S> <C> <C> <C> <C>
John W. Hall.................................... 1996 $318,000 -- 51,021
President, Chief Executive Officer 1995 193,000 $110,542 6,293
and Director
Don P. Duffy.................................... 1996 161,083 -- 4,373
Chief Financial Officer and 1995 138,180 33,000 --
Executive Vice President
Regan E. Kelly.................................. 1996 115,762 5,788 --
Executive Vice President 1995 110,250 22,050 --
Frank Marraccino................................ 1996 169,775 -- 29,373
Executive Vice President 1995 105,000 39,107 --
David Mac Innis................................. 1996 113,414 21,303 4,373
Senior Vice President 1995 100,000 18,542 3,207
Brian Mac Innis(2).............................. 1996 324,000 -- 84,550
Chairman and Chief Executive 1995 223,000 129,150 7,372
Officer
Kirk B. Kelley(3)............................... 1996 110,250 14,315 25,000(5)
Senior Vice President 1995 105,000 25,007 --
</TABLE>
- ---------------
(1) No restricted stock grants were made to any of the Named Executive Officers
during the 1996 fiscal year. However, as of December 31, 1996, Messrs. Kelly
and Marracino held 18,040 and 5,021 shares of restricted stock,
respectively. The aggregate value of these shares as of December 31, 1996
was $153,340 and $42,679 respectively.
(2) Former Chairman and Chief Executive Officer resigned during 1996.
(3) Executive Officer resigned during 1996.
(4) Stock options for shares of Onyx awarded in the year indicated and
exercisable in the future.
(5) Option was granted during 1996 but due to resignation prior to vesting, was
cancelled in entirety.
4
<PAGE> 7
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers for the year ended December 31,
1996. No stock appreciation rights were granted to these individuals during such
year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANT POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PER SHARE OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE ----------------------
NAME GRANTED FISCAL YEAR PRICE(2) EXPIRATION DATE 5% 10%
- ----------------------- ---------- -------------- ---------- --------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall........... 51,021(3) 11.5% $11.49 March 17, 2006 $955,113 $1,520,426
Don P. Duffy........... 4,373(3) 0.9% $11.49 March 17, 2006 81,863 130,315
Frank L. Marraccino.... 4,373(3) 0.9% $11.49 March 17, 2006 81,863 130,315
25,000(4) 6.0% $10.40 July 28, 2006 423,500 674,250
David Mac Innis........ 4,373(3) 0.9% $11.49 March 17, 2006 81,863 130,315
Regan E. Kelly......... -- -- -- -- -- --
Brian Mac Innis........ -- -- -- -- -- --
Kirk B. Kelley......... -- -- -- -- -- --
</TABLE>
- ---------------
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are permitted by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock appreciates over
the option term, no value will be realized from the option grants made to
the executive officers.
(2) The exercise price may be paid in cash, in shares of Common Stock valued at
fair market value on the date of exercise or pursuant to a cashless exercise
procedure involving a same-day sale of the purchased shares.
(3) Option was granted on March 18, 1996 of which 25% was immediately
exercisable, with remainder vesting over 48 month period from grant date.
(4) Option was granted on July 29, 1996. Vesting will begin on July 29, 1997 at
2.1% per month for 48 months.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning the value of
unexercised options held by each of the Named Executive Officers for the year
ended December 31, 1996. No options or stock appreciation rights were exercised
during such year and no stock appreciation rights were outstanding at the end of
that year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR
OPTIONS AT FISCAL YEAR END END(1)
SHARES ACQUIRED VALUE ----------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- -------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall.............. -- -- 75,476 38,266 $ 450,875 --
Don P. Duffy.............. 12,266 $154,797(2) 24,660 8,868 $ 187,207 $44,649
Frank L. Marracino........ -- -- 1,093 53,280 -- --
David Mac Innis........... -- -- 8,673 4,738 $ 40,201 $12,393
Regan E. Kelly............ -- -- 3,571 2,551 $ 28,533 $20,382
Brian Mac Innis........... -- -- 94,805 -- $ 757,492 --
Kirk B. Kelley............ -- -- -- -- -- --
</TABLE>
- ---------------
(1) Based on the fair market value of the option shares at fiscal year-end
($8.50 per share) less the exercise price ($.5145 per share) payable for
such shares.
(2) Value realized is based upon a market price of $13.13 at exercise, less cost
to optionee at $0.51 per share.
5
<PAGE> 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Hoff and Jones. None of these individuals was at any time
during the year ended December 31, 1996 or at any other time an officer or
employee of the Company.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
None of the Company's executive officers have employment agreements with
the Company, and their employment may be terminated at any time at the
discretion of the Board of Directors. Stock options granted under the Company's
1996 Plan may be accelerated at the discretion of the Board in the event of a
change of control of the Company or in the event of an involuntary termination
following a change of control.
DIRECTOR REMUNERATION
The directors do not receive compensation for services on the Board of
Directors or any committee thereof but are reimbursed for their out-of-pocket
expenses in serving on the Board of Directors. Certain non-employee members of
the Board of Directors have been granted options to purchase shares of the
Company's Common Stock from time to time in connection with their appointment to
and performance on the Board of Directors. Additionally, each of the
non-employee members of the Board of Directors is eligible to receive options to
purchase Common Stock under the 1996 Plan's Automatic Option Grant Program.
Under the Automatic Option Grant Program, at each annual Stockholders
Meeting each individual with at least six months of Board service who is to
continue to serve as a non-employee Board after the meeting will receive an
option grant to purchase 2,000 shares of Common Stock, whether or not such
individual has been in the prior employ of the Company or joined the Board prior
to the Offering.
Each automatic grant will have a term of 10 years, subject to earlier
termination following the optionee's cessation of Board service. Each automatic
option will be immediately exercisable; however, any shares purchased upon
exercise of the option will be subject to repurchase should the optionee's
service as a non-employee Board member cease prior to vesting in the shares. The
initial 8,000-share grant will vest in successive equal quarterly installments
over the optionee's initial four year period of Board service. Each additional
2,000-share grant will vest upon the optionee's completion of one year of Board
service measured from the grant date. However, each outstanding option will
immediately vest upon (i) certain changes in the ownership or control of the
Company or (ii) the death or disability of the optionee while serving as a Board
member.
Directors Hoff, Jones, Hallett and Stickel received grants in 1996 in the
amount of 8,000 shares each. Mr. Stickel received an additional grant of 20,000
upon his appointment as Chairman. These same directors will receive a grant of
2,000 shares following the Annual Shareholders Meeting in 1997.
REPORT OF THE COMPENSATION COMMITTEE
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives.
COMPENSATION PHILOSOPHY
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies,
plans and programs which seek to enhance the profitability of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's
6
<PAGE> 9
senior managers and employees with those of its shareholders. The Compensation
Committee endorses the belief that stock ownership by all employees including
the granting of stock options to employees furthers that goal and fosters
decision-making by its employees with the Company's long-term performance in
mind.
The compensation plans and programs are structured to integrate pay with
the Company's annual and long-term performance goals. The plans and programs are
designed to recognize initiative and achievement and to assist the Company in
attracting and retaining qualified employees. In furtherance of these goals,
annual base salaries are generally set at competitive levels and the Company
relies to a large degree on annual incentive compensation to attract and retain
key employees with outstanding abilities and to motivate them to perform to the
full extent of their abilities. For the longer term, incentive stock options are
awarded by the Company, the stock of which is traded on NASDAQ. Incentive
compensation is variable and closely tied to corporate, business unit and
individual performance in a manner that encourages a sharp and continuing focus
on building profitability and shareholder value. As a result of the increased
emphasis on tying executive compensation to corporate performance, in any
particular year the total compensation of the Company's executives may be more
or less than the executives of the Company's competitors, depending upon the
Company's or the individual business unit's performance.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer and other senior executives, the Compensation Committee
takes into account their commitment to long-term success of the Company through
management of their respective units as dictated by existing and anticipated
market conditions. Certainly the Compensation Committee expects and rewards
recognition by the Chief Executive Officer and senior executives of both adverse
and advantageous market conditions for each of the Company's major divisions.
At the beginning of each year, performance goals to determine annual
incentive compensation are established for each executive. Financial goals
include loan volume growth, operating earnings, loan losses, delinquency levels,
cost controls, productivity and profitability.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1996, the
Compensation Committee discussed and considered all of the factors discussed
above in the overall context of the Company's change of Chief Executive Officer
in September of 1996. The Committee demonstrated its confidence in the abilities
of Mr. Hall by providing him an increase in his base salary and the grant of
stock options during 1996, but concluded that, in light of the performance of
the stock during 1996, it would not have been appropriate to stockholders to
grant a bonus, regardless of the superior job Mr. Hall had performed and such is
reflected in the Compensation Table.
STOCK OPTION GRANTS
Onyx Acceptance Corporation uses stock options as long-term incentives and
expects that it will continue to issue this compensation alternative in the
future. In 1996, the Company adopted a new stock option plan that made 600,000
shares of Common Stock of the Company available for just such purposes. The Onyx
Compensation Committee grants incentive stock options to employees of the
Company and views such grants less as compensation and more as an incentive
mechanism. Limited grants were made in 1996 to some executives as shown in the
Summary Compensation Table, and to other key employees, which are in the
appropriate tables.
POLICY REGARDING COMPLIANCE WITH I.R.C. SECTION 162(M)
Section 162(m) of the Internal Revenue Code, as enacted by the Omnibus
Budget Reconciliation Act of 1993, provides in general that, beginning in 1994,
compensation paid to certain executives of publicly held corporations will not
be deductible for federal income tax purposes to the extent it exceeds
$1,000,000 per year unless certain conditions are met. It is the present policy
of the Compensation Committee that individual compensation shall not exceed the
deductibility requirements of Internal Revenue Code, Section 162(m) and the
Company intends to take the necessary steps to comply, but also reserves the
right to enter into incentive
7
<PAGE> 10
and other compensation arrangements that do not comply when it determines that
the benefits to the Company outweigh the cost of the possible loss of federal
income tax deductions.
COMPENSATION COMMITTEE
Robert A. Hoff
G. Bradford Jones
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH OFFICERS AND DIRECTORS
In December 1994, the Company loaned $175,000 to each of Brian Mac Innis a
former director and the Company's former Chief Executive Officer and John Hall,
the Company's current Chief Executive Officer, President and a director of the
Company. These loans are each evidenced by a promissory note (collectively, the
"Notes") with interest at 6.66% per annum. All principal and accrued interest
under the Notes is due on December 20, 1997. In connection with these loans,
Messrs. Mac Innis and Hall each granted the Company an option (the "Company
Options") to repurchase, at a price per share of $18.87, up to 9,277 shares of
Common Stock owned by Mr. Mac Innis and up to 9,277 shares of Common Stock owned
by Mr. Hall. The Company Options are exercisable from December 20, 1995 through
December 20, 1997.
RELATIONSHIP OF COMPANY TO BROBECK, PHLEGER & HARRISON LLP
Bruce R. Hallett, the Company's Secretary and a director, is a partner in
the law firm of Brobeck, Phleger & Harrison LLP ("Brobeck"). As of December 31,
1996, members of Brobeck beneficially owned 22,899 shares of the Company's
Common Stock. Brobeck has served as the Company's counsel since inception. For
the year ended December 31, 1996, the Company paid Brobeck $850,000 for legal
services and costs incurred in connection with the Company's operations,
including its securitizations and initial public offering.
COMPANY PROPOSALS
The following proposals will be submitted for stockholder consideration and
voting at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The following persons are nominated for election as directors, to hold
office for a term of three years expiring at the third succeeding Annual
Meeting:
Bruce R. Hallett
Don P. Duffy
The nominees listed above are current members of the Board of Directors.
All proxies received by the Board of Directors will be voted for the nominees if
no directions to the contrary are given. In the event that the nominees are
unable or decline to serve, an event that is not anticipated, the proxies will
be voted for the election of nominees designated by the Board of Directors, or
if none are so designated, will be voted according to the judgment of the person
or persons voting the proxy.
VOTE REQUIRED
The two nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as directors. Votes withheld from
any director are counted for purposes of determining the
8
<PAGE> 11
presence or absence of a quorum for the transaction of business, but have no
other legal effect. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE NOMINEES.
PROPOSAL 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has selected Coopers & Lybrand LLP as the
Company's independent accountants for the fiscal year ending December 31, 1997.
Although the appointment of Coopers & Lybrand LLP is not required to be
submitted to a vote of the stockholders, the Board of Directors believes it
appropriate as a matter of policy to request that the stockholders ratify the
appointment for the current fiscal year. In the event a majority of the votes
cast at the meeting are not voted in favor of the appointment, the Board of
Directors will reconsider its selection. Proxies solicited by the Board of
Directors will be voted in favor of the appointment unless stockholders specify
otherwise in such proxies.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting with the opportunity to make a statement if the
representative so desires and to respond to appropriate questions.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Common Stock voting at
the Annual Meeting is required to ratify the selection of Coopers & Lybrand
L.L.P. as independent accountants. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
9
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's Common Stock as of
March 31, 1996, by: (i) each person (or group of affiliated persons) who is
known by the Company to own beneficially 5% or more of any class of the
Company's Securities; (ii) each of the Company's directors; (iii) the Company's
Chief Executive Officer and each of the Named Executive Officers; and (iv) the
Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED OFFERING(1)
---------------------
NAME AND ADDRESS(2) NUMBER PERCENT
- --------------------------------------------------------------------- --------- -------
<S> <C> <C>
Robert A. Hoff(3).................................................... 752,113 13.2%
G. Bradford Jones(4)................................................. 647,569 11.4%
The Bass Group(12)................................................... 348,000 6.1%
John W. Hall(5)...................................................... 294,136 5.2%
Regan E. Kelly(6).................................................... 112,080 2.0%
Don P. Duffy(7)...................................................... 35,591 *
Frank Marraccino(8).................................................. 26,540 *
Bruce R. Hallett(9).................................................. 14,123 *
Thomas C. Stickel(10)................................................ 32,682 *
All executive officers and directors
as a group (10 persons)(11)........................................ 1,914,834 33.6%
</TABLE>
- ---------------
* Less than one percent.
(1) Percentage of ownership is based on 5,700,515 shares of Common Stock
outstanding as of April 30, 1997.
(2) Unless otherwise indicated, the persons named in the table have sole voting
and sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(3) Includes, as of March 31, 1997: 8,000 shares of Common Stock issuable upon
the exercise of immediately exercisable shares by Mr. Hoff. Mr. Hoff, as a
general partner of Crosspoint Venture Partners 1993, 18552 MacArthur
Boulevard, Suite 400, Irvine, California 92714 may be deemed to share
voting and dispositive power with respect to these shares. Mr. Hoff
disclaims beneficial ownership of these shares except for his proportional
interest therein.
(4) Includes, as of March 31, 1997: 8,000 shares of Common Stock issuable upon
the exercise of immediately exercisable shares by Mr. Jones. Mr. Jones, as
a general partner of Brentwood Associates VI, L.P., 2730 Sand Hill Road,
suite 250, Menlo Park, California 94025 may be deemed to share voting and
dispositive power with respect to these shares. Mr. Jones disclaims
beneficial ownership of these shares except for his proportional interest
therein.
(5) Includes, as of March 31, 1997: 75,478 shares of Common Stock issuable upon
the exercise of immediately exercisable options, none of which would be
subject to repurchase by the Company. Mr. Hall is President and CEO of Onyx
Acceptance Corporation, 8001 Irvine Center Drive, 5th Floor, Irvine, Ca.
92618.
(6) Includes, as of March 31, 1997: (i) 6,123 shares of Common Stock issuable
upon the exercise of immediately exercisable options, of which 1,403 shares
of Common Stock would be subject to repurchase by the Company under certain
circumstances; and (ii) 17,490 shares of Common Stock subject to repurchase
by the Company under certain circumstances.
(7) Includes, as of March 31, 1997: (i) 24,660 shares of Common Stock issuable
upon the exercise of immediately exercisable options, of which 8,868 shares
of Common Stock would be subject to repurchase by the Company under certain
circumstances.
(8) Includes, as of March 31, 1997, 5,020 shares of Common Stock subject to
repurchase by the Company under certain circumstances.
(9) Includes, as of March 31, 1997, 14,123 shares of Common Stock issuable upon
the exercise of immediately exercisable options, of which 1,547 would be
subject to repurchase by the Company under certain circumstances.
(10) Includes, as of March 31, 1997, 32,682 shares of Common Stock issuable upon
the exercise of immediately exercisable options, of which 3,006 would be
subject to repurchase by the Company under certain circumstances.
(11) Includes, as of March 31, 1997, (i) 752,113 shares of Common Stock held by
Crosspoint Venture Partners 1993, and/or Crosspoint Venture Partners
Entrepreneurs 1993, (ii) 639,569 shares of Common Stock held by Brentwood
Associates VI, L.P., (iii) an aggregate of 28,466 shares of Common Stock
subject to repurchase by the Company
10
<PAGE> 13
under certain circumstances, and (iv) an aggregate of 127,982 shares issuable to
the Company's executive officers and directors upon the exercise of immediately
exercisable options of which 4,191 shares are subject to repurchase by the
Company under certain circumstances, and (v) does not include 348,000
shares owned by the Bass Group.
(12) The Bass Group as used herein consists of The Bass Management Trust (87,000
shares; 1.5%), Perry R. Bass (87,000 shares; 1.5%), Nancy L. Bass (0
shares; 0.0%), Sid R. Bass Management Trust (87,000 shares; 1.5%), Sid R.
Bass (87,000 shares; 1.5%), Lee M. Bass (87,000 shares; 1.5%), Edward P.
Bass (87,000 shares; 1.5%). The above persons are collectively referred to
as the "Reporting Persons" pursuant to a 13D Filing dated January 8, 1997,
and made a single, joint filing because they may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Act, although neither
the fact of that filing nor anything therein should be deemed to be an
admission by the Reporting Persons that a group exists.
STOCK PRICE PERFORMANCE GRAPH (2)
Set forth below is a line graph depicting the quarterly percentage change
in the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the NASDAQ Composite (US) and a compiled peer
group for the period commencing March 26, 1996, when the Company initiated
trading and ending December 31, 1996.
<TABLE>
<CAPTION>
Measurement Period Onyx Accept- Peer Group Nasdaq Com-
(Fiscal Year Covered) ance Corp. (1) posite (US)
<S> <C> <C> <C>
3/26/96 100 100 100
3/29/96 109.80 105.57 101.20
6/28/96 117.65 112.98 108.96
9/30/96 92.16 120.09 112.87
12/31/96 66.67 106.64 118.83
</TABLE>
(1) Peer Group consists of WFS Financial, Oxford Resources, Inc., Union
Acceptance Corporation and Olympic Financial Corporation.
(2) This section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference into any filing of the Company
under the Securities Act or the Exchange Act whether made before or after
the date hereof and irrespective of any general incorporation language in
such filing.
11
<PAGE> 14
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more then ten percent of the Company's
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of the Common Stock of the
Company. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, the Company believes that all of its officers and
directors and greater than ten percent beneficial owners complied with all
Section 16(a) filing requirements applicable to them with respect to
transactions during the fiscal year ended December 31, 1996.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and proxy for the 1998 Annual Meeting must
submit such proposal so that it is received by the Company no later than January
2, 1998. Stockholder proposals should be submitted to the Secretary of the
Company. No stockholder proposals were received for inclusion in this proxy
statement.
Pursuant to the Company Bylaws, no business proposal will be considered
properly brought before the next annual meeting by a stockholder, and no
nomination for the election of directors will be considered properly made at the
next annual meeting by a stockholder, unless notice thereof, which contains
certain information required by the Bylaws, is provided to the Company no later
than 90 days prior to the next annual meeting.
OTHER MATTERS
While the Notice of Annual Meeting of Stockholders calls for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented for action by
the stockholders other than as set forth above. The enclosed proxy gives
discretionary authority to the Board of Directors, however, to consider and vote
on any additional matters that may be presented.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report on Form 10-K for the year ended December 31,
1996 is being mailed to stockholders together with this Proxy Statement.
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Regan E. Kelly
Assistant Secretary
Irvine, California
May 2, 1997
12
<PAGE> 15
[CLASS A PROXY CARD - FRONT]
PROXY PROXY
ONYX ACCEPTANCE CORPORATION
Proxy Solicited on Behalf of the Board of Directors
For The Annual Meeting of Shareholders -- May 22, 1997
The undersigned appoints John W. Hall and Thomas Stickel, and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all the shares of Common Stock of Onyx
Acceptance Corporation which the undersigned has power to vote, with all powers
which the undersigned would possess if personally present, at the Annual
Meeting of Shareholders thereof to be held on May 22, 1997, or at any
adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of
the nominees named, and FOR Proposal No. 2. In their discretion, the proxies
are authorized to vote on any other business that may properly come before the
Meeting or any adjournment thereof.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
[CLASS A PROXY CARD - BACK]
ONYX ACCEPTANCE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
1. Election of Directors-- For All
Nominees: Bruce R. Hallett For Withheld Except
Don P. Duffy [ ] [ ] [ ]
(Except nominee(s) written above.)
2. Ratification of Coopers & Lybrand LLP as independent accountants for
fiscal year 1997.
For Against Abstain
[ ] [ ] [ ]
The undersigned acknowledges receipt of the Notice of Annual Meeting
of Shareholders and of the Proxy Statement.
Dated: , 1997
------------------
